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Telephone Companies Get Riled Up By Competition From Internet Rivals

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On any given day, they gather to talk, speaking through their computers, reaching far-flung places like South Africa and Brazil. It doesn't really matter how long they converse. For these computer users, overseas calls are practically free.

Their secret? The Internet. Using a new breed of software, computer enthusiasts are turning the Internet into a worldwide telephone system.

"I really want to make friends in other parts of the world," says first-time user Claudio Alves, who reaches the United States from Fortaleza, Brazil. "And I think the Internet is the best way to do it."

"I talk to a lot of people from around the world," adds Leif Lieng, a civil engineer in Drammen, Norway, who has been using an Internet phone since the spring. He not only used the technology to send verbal greetings but also a color picture of himself with his two grandchildren. When his brother hooks up a computer in his Ft. Lauderdale, Fla., home, Mr. Lieng expects to have long transatlantic conversations with him - at a cost of only about $1 an hour.

"This revolution is such a huge wave," says Elon Ganor, chairman and chief executive officer of VocalTec, an Israeli company that makes one of the leading Internet telephone products. "It's not something that anything can stop."

If his and other companies can perfect the technology, Mr. Ganor expects people to talk, share pictures, and maybe even hold a live video conversation over the Internet as routinely as they send electronic mail today.

Colleagues thousands of miles apart could simultaneously edit a document. New parents could send along a photo of their baby as they talk to relatives. And smaller Internet telephone companies like CallWare Technologies in Salt Lake City have upgraded their programs to include voice-mail.

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